Tens of millions of parents are familiar with the children’s apps made by Swedish firm Toca Boca. Now it’s hoping to capitalise on that reputation as it explores the worlds of TV and video.

The company is launching a new video division, based in New York and headed up by J Milligan, who previously worked as creative director of Sesame Street parent company Sesame Workshop’s content innovation lab.

Toca Boca’s apps have been downloaded more than 85m times on iOS and Android devices since its launch in 2011, but the company sees potential in the online video world, where children’s channels are among the most popular on YouTube, while services like Netflix and Amazon are commissioning shows for kids.

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“Streaming services like Netflix and YouTube have transformed how kids define TV and video,” said Toca Boca chief executive Björn Jeffery in a statement. “Video as a medium separates itself from TV with new formats, fewer constraints and different consumer expectations and we’re excited to dive into this new landscape.”

Milligan is currently recruiting a team for the New York office, with the first videos due to launch in the second half of 2015. He told the Guardian that Toca Boca is being guided by children’s evolving entertainment habits.

“This is already how kids behave: if there’s a family iPad, there’s some point at which the kid takes control over it, and that’s their screen, even though there’s still a TV in the corner,” he said.

“Toca Boca’s first screen is the tablet, and that’s what the video experience is like for kids already. My son will watch Lego videos on YouTube, Phineas and Ferb and a video I shot of me going down a waterslide, all in the same hour.

“If we’re in a hotel room and I turn on the TV and it’s in the middle of the show, he’ll say ‘start it over!’. And if I say I can’t because it started at 2pm, he’ll be ‘Really? Why would they do that?’ But this is their world.”

For now, Toca Boca isn’t talking in detail about what kinds of videos or shows it plans to make, although Milligan said that it is more likely to skew towards the short-form content that’s popular on YouTube than the longer shows on Netflix.

Until now, Toca Boca’s videos have been promotional in nature, for its apps.

“Toca Boca is all about the power of play, and giving kids the tools to use their imagination. So how does that map to video consumption, which can be incredibly passive? How can we make this a playful experience?” he said.

“It’s an almost blank piece of paper, and that’s really exciting. It’s an amazing starting point: how do we make this playful and engaging and interactive, but still what you want while watching?”

Milligan also hinted that Toca Boca won’t be merely making videos, but building its own platform to deliver them to parents. The logical comparison is to Rovio and Outfit7, who have both made their videos part of their Angry Birds and Talking Friends apps respectively.

“We have this opportunity: once we’ve built it, we’ll have our own distribution platform. Ultimately, it’s not like YouTube or Netflix are beholden to programming schedules, but we really won’t be beholden to them,” said Milligan.

“The day we launch is the day we start the next phase, where in a Netflix way we’ll know what people are into, and then we’ll be able to build on what’s successful. We’re going to take a nimble and lean approach to everything.”

Online video could also be an important new revenue stream for Toca Boca, which has maintained its principle of charging for apps rather than using in-app purchases. According to its most recent set of financial results, for 2013, it made just over $8.6m of revenue that year from 35m app downloads.

The company is a subsidiary of Swedish media firm Bonnier, which gives it a more stable base than most children’s app publishers – even if it operates as a standalone unit. The parent firm, plus tens of millions of app downloads a year should be a good launchpad for Toca Boca’s video business.

However, if the company decides to make money from advertising, it will need to pick its path as carefully as it has done with app purchasing: a group of children’s and consumer advocacy groups recently filed a formal complaint with the US Federal Trade Commission about the advertising in the recently-launched YouTube Kids app.